Kind of what I figured. But you have to admit that Infinity Blade III looks very good. So the A7 can run a good looking game on at least a small screen.
So MCSFT doesn't need to worry. For now. But if this next generation console is intended to last for six years, how do you think its power will compare to the A10? This is pure speculation. But in three years could Apple be putting in something that starts to become comparable to the consoles?
Infinity Blade is more a testament to developers than the chip it runs on. Don't get me wrong. For what it is, the A7 is a powerhouse. But what makes the entire Infinity blade series look so fabulous is that there really isn't a whole lot being rendered. For the most part it's two characters and a background. There isn't a whole lot going on except the interaction between the two characters at any given time.
You also have to consider resolutions. The XBOne is 1920x1080 The iPhone 5S is 640x1136. The iPhone's output is 1/3 that of what the XBOne has to do. The retina ipad beats that, but my suspicion is that up-conversion/scaling goes on here and that it is not a true 2048x1536 (speaking games).
This isn't to say that Apple couldn't do VERY well loading games on their Apple TV. Games already sell really well on all of their other devices. And most of them don't even require a beast processor to get the job done (hell, look at the phenomenon that is tiny wings... which I think is ridiculous, but that's beside the point).
One final thing to consider is heat output. You could push the A7 to its limits, but without active cooling, that *might* pose problems. Of course I supposed Apple could add some sort of cooling, but that would be different than any APple TV before it.
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A7 can have similar specs to xbox 360 but until apple ups the storage to hundreds of GB you won't get games with the same production quality
They could require the dreaded "always on" connection and essentially have you download/stream the game while it's playing.
That is but one option, of course. There are less "sexy" options, such as allowing for an external hard drive (easy to do, though feels "un-Apple) or simply not allow dozens of games to be installed at one time.